The New Space Race

Last week, Space Explorations Technologies, or SpaceX, of Hawthorne, California became the first commercial company to deliver cargo to the International Space Station (ISS). In the process, it captivated the popular imagination and secured a permanent place in the annals of space history.

SpaceX’s Dragon space vehicle blasted off from Cape Canaveral atop a Falcon 9 booster on May 22. Three days later, it hooked up with the ISS orbiting more than two hundred miles above the Earth. Over the next several days, astronauts on board the space station unloaded fresh supplies from Dragon, then repacked it with materials for the return trip to Earth. The capsule safely de-orbited and splashed down in the Pacific Ocean on May 31.

The nine-day mission was a remarkable achievement for the company and its founder, Internet entrepreneur Elon Musk. He and his relatively young team of engineers overcame very long technical odds. They also had to endure the outright skepticism of some space veterans and government officials. Every successful space mission, it is said, requires that ten thousand things go right at the same time. SpaceX made that happen with near perfection—and with the same zeal and self-confidence of earlier space pioneers.

Still, the task ultimately turned out to be harder and take longer than Musk may have imagined when he created SpaceX in 2002. The first three launches of the company’s smaller Falcon 1 booster ended in failure. As Musk himself revealed in a recent 60 Minutes interview, if the fourth attempt had not succeeded, SpaceX would not have had the financial resources to try again. Fortunately, in September 2008, a Falcon 1 rocket launched from the Kwajalein Atoll in the Pacific successfully boosted a payload into orbit. Nearly two years later, the larger, more powerful Falcon 9 succeeded on its maiden flight out of Cape Canaveral.

NASA’s New Strategy

In addition to affirming SpaceX’s technical prowess, last week’s events also came as welcome news to space officials in the Obama administration. Shortly after the Dragon space vehicle arrived at the ISS, John Holdren, assistant to the president for science and technology, described the feat as “a key milestone in President Obama's vision for America's continued leadership in space.”

That vision, made public in February 2010, called for commercial companies—with a substantial infusion of cash and technical support from NASA—to assume the task of ferrying astronauts to the space station after the Space Shuttle retired. NASA itself would shift its focus to developing new, innovative technologies to fly beyond low Earth orbit (LEO) and the moon, to the asteroids and Mars.

To be fair, SpaceX began work on the Falcon 9 and Dragon well before President Obama came into office—and with the help of government funds provided under the Bush administration. Still, Obama gave an important vote of confidence to SpaceX when he visited its Cape Canaveral operation in April 2010, and his administration’s new space strategy publicly underscored the importance of the company’s efforts.

There’s still a long way to go before this new strategy is fully validated. SpaceX and the other firms vying for NASA contracts will need to demonstrate reliability over time. They also must meet the more stringent requirements associated with sending humans into space. Nevertheless, the successful launch and return of the Dragon space vehicle give grounds for increased optimism that commercial companies will ultimately fill the void left by the shuttle’s retirement and avoid the need to rely solely upon the Russians for this service.

The Business of Space

SpaceX is clearly a pioneer—but it’s also a business. In this sense, the greatest challenges for the company may reside not in space but in the marketplace.

While they have bragging rights for being first to reach the space station, other commercial companies are poised to compete for a share of the ISS mission. In addition to SpaceX, NASA has already purchased services for cargo delivery from Orbital Sciences Corporation of Dulles, Virginia. The maiden flight of its Antares booster mated with a Cygnus spacecraft is scheduled to launch from Wallops Island later this year. Additionally, NASA is supporting several other companies to develop the capability to fly astronauts to the ISS and other LEO destinations by the middle of this decade.

SpaceX’s business plan, however, involves more than ferrying supplies and eventually astronauts to the ISS. Musk has stated that SpaceX already has forty launches on contract, of which only twelve involve the space station. The others are for U.S. commercial and international customers.

In this broader market segment, SpaceX will be forced to compete with companies like Denver-basedUnited Launch Alliance (ULA), formed six years ago by aerospace giants Boeing and Lockheed-Martin. ULA currently has a monopoly on U.S. national-security launches and a long track record of success. Additionally, SpaceX will have to contend with heavily subsidized Russian, Chinese, European and other overseas launch providers.

SpaceX’s business model banks on being able to provide launch services at a fraction of the cost of more established competitors. It will need to demonstrate that it can actually do so, while also meeting the mission assurance and schedule requirements of its customers (and their insurers). Moreover, the very competition SpaceX aims to bring to the market could potentially drive down costs across the industry. If SpaceX can indeed deliver on its promised price advantage, it will have to work hard to keep it.

In short, breaking into, much less thriving, in the launch business will be a challenge—as it always has been. But for now, SpaceX has every reason to enjoy the moment and look with renewed confidence toward the future. Elon Musk has said that he wants to eventually get to Mars. If his accomplishments over the past several days are any guide, he just might do it.

Frank Klotz is a senior fellow at the Council on Foreign Relations in Washington, DC, as well as the former commander of Air Force Global Strike Command and the former vice commander of Air Force Space Command.